In the Real World, Business Decisions Must Be Made Through

question 39

Multiple Choice

In the real world, business decisions must be made through insight, trial, and error, without perfect knowledge about demand and costs. Will the profit-maximizing prices and levels of output from the simple economic models still be good guides to real outcomes?

• A) No, because the simple economic models ignore the opportunity cost of resources.
• B) No, because even entrepreneurs who are able to find the profit-maximizing prices and level of output will be unable to compete with other entrepreneurs who charge higher prices.
• C) Yes, because they can hire economists who have sufficient knowledge of costs and demand conditions.
• D) Yes, because the entrepreneurs who are best able to find the profit-maximizing prices and output levels will survive and expand, driving others out of competitive markets.

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Definitions:

General Explanations

Broad, overarching reasons or rationales that provide understanding or clarification for phenomena, behaviors, or events.

Economic Roles

The functions and positions individuals and groups occupy in the economic system, affecting how they produce, distribute, and consume goods and services.

Single-Income

Pertaining to a household or an individual who relies on one source of income, typically from one wage earner.

Two-Income Couples

Households in which both partners earn wages or salaries, contributing to the family's total income.